This Statement of Administration Policy provides the Administration's views
on the Veterans, Housing and Urban Development, and Independent Agencies
Appropriations Bill, FY 2001, as approved by the House Committee. Your
consideration of the Administration's views would be appreciated.

The President's FY 2001 Budget is based on a balanced approach that
maintains fiscal discipline, eliminates the national debt, extends the
solvency of Social Security and Medicare, provides for an appropriately
sized tax cut, establishes a new voluntary Medicare prescription drug
benefit in the context of broader reforms, expands health care coverage to
more families, and funds critical investments for our future. An essential
element of this approach is ensuring adequate funding for discretionary
programs. To this end, the President has proposed discretionary spending
limits at levels that we believe are necessary to serve the American
people.

Unfortunately, the FY 2001 congressional budget resolution provides
inadequate resources for discretionary investments. We need realistic
levels of funding for critical government functions that the American
people expect their government to perform well, including education,
national security, law enforcement, environmental protection, preservation
of our global leadership, air safety, food safety, economic assistance for
the less fortunate, research and technology, and the administration of
Social Security and Medicare. Based on the inadequate budget resolution,
this bill fails to address critical needs of the American people.

The Committee allocation is $6 billion below the President's program level
request. In order to approve a bill at the level of this allocation, the
Committee has eliminated the Corporation for National and Community
Service, and has severely reduced funding from the requests for the
Department of Housing and Urban Development, the National Science
Foundation, the National Aeronautics and Space Administration, the
Environmental Protection Agency's basic environmental and public health
programs, the Federal Emergency Management Agency, and other Administration
priorities.

The Administration strongly opposes the Committee's action to terminate the
Corporation for National and Community Service, including the AmeriCorps
program. Eliminating funding for the Corporation would deny over one
million young Americans the opportunity to provide vital community services
and become better citizens as participants in the Corporation's AmeriCorps
(62,000 participants) and Learn and Serve (1 million participants)
programs. If the final bill presented to the President were to provide
inadequate funding for the Corporation for National and Community Service,
his senior advisers would recommend that the President veto the bill.

The Committee bill would also limit our ability to address poverty and the
shortage of affordable housing, undermine investments in our future through
space research and science and technology, reduce our ability to pursue
critical opportunities in basic research through the National Science
Foundation, adversely affect the environment and public health, and
adversely affect our ability to respond quickly and fully to unforeseen
disasters. Further, the Committee bill includes objectionable language
provisions, such as anti-environmental riders, efforts to hamper the
Department of Veterans Affairs ability to support the tobacco litigation
using current statutory authority, and language limiting HUD's efforts to
deliver vital services to the American people. For these reasons, if the
bill were presented to the President in its current form, the President's
senior advisers would recommend that he veto the bill.

Detailed discussions of certain of these issues, as well as additional
Administration concerns with the Committee bill, are provided in the
attachment. We look forward to working with the Committee to address our
mutual concerns.

Attachment

DEPARTMENT OF VETERANS AFFAIRS AND
HOUSING AND URBAN DEVELOPMENT, AND
INDEPENDENT AGENCIES APPROPRIATIONS BILL, FY 2001
(AS APPROVED BY THE HOUSE COMMITTEE)

Corporation for National Community Service

The Administration is deeply concerned that the House Committee bill
terminates the Corporation for National and Community Service, including
the AmeriCorps program. In FY 2001, the Committee bill would deny 62,000
Americans the opportunity to meet pressing education, public safety, and
human and environmental needs in exchange for help with college costs
through participation in AmeriCorps. This action would eliminate the
President's goal of reaching 100,000 AmeriCorps participants a year by FY
2004. In addition, in FY 2001, the bill would prevent more than one
million students from participating in service-learning programs that
provide substantial academic and social benefits, including the opportunity
to learn responsible citizenship. The Administration strongly urges the
House to fully fund the Corporation at the requested level of $534 million.

Department of Housing and Urban Development

The Committee bill provides $29.9 billion for the Department of Housing and
Urban Development (HUD), an overall programmatic reduction of $2.5 billion
from the President's request, excluding proposed offsets. This reduction
would eliminate most of the increases that the President has requested to
help HUD address poverty and the shortage of affordable housing.

Housing Assistance. The bill provides no net new housing
assistance. The Committee bill also fails to address the shortage of
affordable housing to help homeless and low-income families, low-income
elderly, the disabled, and people with HIV/AIDS.

The Committee bill fails to fund the Administration's request for
120,000 incremental rental assistance vouchers at a time when a record 5.4
million unassisted low-income households have "worst-case" housing needs
and spend over 50 percent of their income on rent. This would add to the
growing backlog of families who cannot afford decent, safe, and sanitary
housing. In fact, the bill calls for a rescission of $275 million --
endangering funding for either renewals of existing vouchers or tenant
protections.

The Committee bill would cut the request for housing for the elderly
and disabled by $78 million and would cut requested assistance for
people with HIV/AIDS by $28 million. The Administration encourages
the Committee to restore requested funding to meet the needs of
low-income elderly, the disabled, and people with HIV/AIDS. The bill
also cuts the request for the HOME program by $65 million, which would
mean 2,425 fewer households would receive critical assistance.

Reductions of $155 million in public housing programs, including some
cuts below enacted levels, would reduce capital improvements,
resulting in tens of thousands of additional public housing units
developing moderate to severe physical problems. Such a large
decrease in funding would only increase the rate of deterioration and
accumulation of needs over time. This would be compounded by the
failure to fund $54 million in operating subsidies for housing
authorities and $60 million in HOPE VI funds to replace distressed
housing projects.

The Administration is very concerned about the Committee bill's
authorization of a new program to permit local housing authorities to
spend reserve funds to increase rents and provide additional services
in selected areas where the lease-up rates for housing vouchers may be
experiencing problems. This costly new provision is overly permissive
and has few controls. When fully implemented, it would increase costs
as much as $500 million per year if local housing authorities opted to
use it for only 10 to 15 percent of all housing vouchers. While more
flexibility is needed to make housing vouchers work better, the
Administration believes its more limited proposal for a $50 million
Voucher Success Fund would accomplish the same goal more efficiently
and without the risk of rapid cost increases.

The Committee bill does not provide sufficient funds for housing
counseling and does not include provisions to create a new hybrid
adjustable rate mortgage and increase the loan limit for FHA single
family guarantees. The Administration urges the adoption of these
measures to increase homeownership opportunities and reduce
costs.

Community and Economic Development. The Committee bill fails to
provide requisite funding to carry out the recent bipartisan agreement
between the President, the Speaker of the House, and other congressional
leaders to implement bold and innovative programs -- including the New
Markets Initiative and America's Private Investment Companies -- to help
those places in America our booming economy has left behind.

To help communities and people most in need, the Administration urges
the Committee to fund the following specific initiatives as part of the
bipartisan effort to help distressed communities and make investments in
the untapped markets of America's inner cities, rural areas, and Native
American reservations: America's Private Investment Companies (APIC),
Regional Connections, funding for the Mississippi Delta, Community and
Interfaith Partnerships, and the New Markets University Partnerships.

The Committee bill would cut the Community Development Block Grant
program (CDBG) and other housing and economic activity by $295 million
relative to the enacted level. As a result, about 36,000 fewer people
would receive housing rehabilitation, construction, and homebuyer
assistance. About 12,000 fewer jobs would be created by CDBG.

The Committee bill would cut requested homeless assistance by $180
million, including $105 million for rental assistance vouchers. The
President's request would provide critical assistance to help homeless
families who would otherwise have the greatest difficulty finding
housing move to permanent housing with supportive services.

The bill also cuts the President's request for funds to provide new
jobs and affordable housing for American Indians and Native Alaskans
by $30 million. This request is part of the Administration's Native
American Initiative.

Community Builders. The Committee bill terminates the Community
Builder program, cuts $90 million from HUD's operating budget request, and
delays expenditures for training, technical assistance, and management
improvement funds (Section 421). These actions would hamstring the
Department's efforts to deliver vital services to the American people.
HUD's streamlining efforts over the past few years have already achieved
significant staff reductions. The Committee bill's Community Builder
provision is inconsistent with an agreement reached with the Committee
during the FY 2000 appropriations process and could eliminate up to 800
existing positions. Instead of focusing on improving services and
responsiveness, HUD would now be forced to manage a large personnel
reduction and redefine roles throughout the Department.

Other Concerns

Report language accompanying the Committee bill would undercut the
Department's discretion to manage its own budget by lowering staffing
agency-wide and making HUD operate without the ability to travel, purchase
supplies, and perform other basic agency functions. The Administration
objects to these actions and strongly urges the Committee to provide an
adequate operating budget -- free of micro-management -- that will permit
proper stewardship of these important programs and prompt delivery of
services to needy families.

The Committee provides only a $2.5 million increase for the Office of
Federal Housing Enterprise Oversight (OFHEO). The Administration supports
an increase of at least $4 million over the Committee level to ensure that
OFHEO has the necessary capacity to provide effective oversight of
enterprises that are growing and becoming more complex.

The Committee bill does not increase funding for the Lead Hazard
Control program. The Administration's requested increase is vital to
supporting a strategy to virtually eradicate lead poisoning in children by
2010.

The bill ignores the urgent need to address the problems of crime and
drugs in public housing. The Committee bill fails to fund the
President's $35 million request for the Public Housing Drug
Elimination Program, including $30 million for gun safety and violence
reduction.

The Administration encourages the Committee to fully fund the Office of
Policy Development and Research, which contributes directly to
improving the quality of HUD's policy decisions and programs, as well
as the Department's Partnership for the Advancement of Technology in
Housing (PATH) program to accelerate technologies that will improve
the performance, energy efficiency, and affordability of America's
housing.

National Science Foundation

The Administration strongly opposes the Committee's funding recommendations
for the National Science Foundation (NSF). The Committee's bill would
jeopardize our investment in the future by cutting NSF investments in
science, engineering, and education by $508 million, 11 percent below the
requested level. This reduction would seriously undermine priority
investments in cutting-edge research and eliminate funding for almost
18,000 researchers and science and mathematics educators -- slowing
innovation and reducing the number of well-trained students needed by the
Nation's high tech industries. This reduction would also skew the balance
among the different sciences within our R&D portfolio, eliminating physical
science, mathematics, and engineering research that are needed, for
example, to make our biomedical research investments much more productive.

Research Priorities. The Committee reduction would seriously
undermine priority investments in Information Technology, Nanotechnology,
and Biocomplexity. External advisory committees have emphasized the vital
importance of sustained and adequate Federal investments for long-term,
fundamental research in these key areas. By failing to provide the
Administration's request in these priority areas, the Committee would
severely undercut support for the basic research that serves as the
foundation for breakthroughs in health care, environmental protection,
energy, food production, communications, and a host of technology dependent
industries.

Research Facilities. The Committee's deletion of funding for
Earthscope and the National Ecological Observatory Network (NEON)
would delay the development of large-scale research equipment to
enable us to understand better and predict earthquakes and threats to
sensitive ecological regions. The Committee's refusal to fund a
second terascale computer would significantly hamper the burgeoning
demand from researchers across the country for high speed computer
applications. The Administration is concerned by the Committee's
decision to provide unrequested funding for the lower-priority
High-Performance Instrumented Airborne Platform for Environmental
Research aircraft instead of funding the second terascale computer,
NEON, and Earthscope, all of which went through significant review
prior to approval and endorsement by the National Science Board.

Education. The Administration is troubled by the Committee
bill's inadequate funding for undergraduate education, which is $30
million, or 21 percent, below the Administration's request, and five
percent below the FY 2000 enacted level. The Committee bill would
provide no funds for the Scholarships for Service initiative, which is
intended to educate the next generation of Federal information
technology managers by awarding scholarships for the study of
information assurance and computer security in exchange for federal
service.

Opportunity Fund. The Committee bill would eliminate the
Opportunity Fund, hindering NSF's ability to react to a rapidly
changing research environment. The Fund allows NSF to fund innovative
research that could lead to significant discoveries in new and
emerging fields of science and engineering.

National Aeronautics and Space Administration (NASA)

The Administration appreciates the Committee's effort to fund the
International Space Station program, Space Shuttle safety upgrades, and
Space and Earth Science research. Likewise, we appreciate that the
Committee has included no earmarks for projects that have not been subject
to competitive selection and encourage the Committee to maintain this
standard as it develops its bill.

However, the Administration strongly opposes the Committee bill's
elimination of the $290 million requested for NASA's Space Launch
Initiative, a program that is critical to the long-term future of NASA.
The initiative promises to dramatically lower the cost of future space
launch vehicles while significantly increasing safety and reliability.
This program will enable new opportunities in space exploration as well as
enhance the international competitiveness of the U.S. commercial launch
industry. The Committee's action would also terminate two experimental
launch vehicles, the X-34 and X-37, in which NASA has already invested more
than $200 million in preparation for launches over the next three years.
The Administration urges full restoration of funding for this critical
initiative.

The Administration has several other concerns regarding NASA. First, the
Administration opposes the elimination of the $20 million funding request
for the "Living with a Star" initiative. This initiative would enhance our
understanding of the sun and its impact on Earth and the environment, and
would also help provide early warning against solar flares and mass
ejections that can damage critical infrastructure such as civil, national
security, and commercial satellites. Second, the Administration objects to
the $55 million reduction to NASA's aeronautical research efforts that
promise new technologies to reduce air traffic congestion. Third, the
Administration requests removal of bill and report language preventing NASA
from funding joint research projects with the U.S. Air Force. This
limitation would greatly impair NASA and U.S. Air Force research efforts in
aeronautics and space technology, forcing unnecessary duplication of
efforts between both agencies.

Environmental Protection Agency

The Administration appreciates the Committee's decision not to include
earmarked, special interest projects within the Environmental Protection
Agency's (EPA's) budget. In previous years, the funding of this type of
unauthorized, unrequested projects has severely squeezed funding for core
environmental and statutorily required programs. The Administration hopes
to work with the Congress to maintain restraint throughout the
appropriations process. Despite the Committee's restraint on special
interest projects, we have several major concerns with the funding provided
for EPA in the Committee bill.

In particular, the Administration strongly opposes the $199 million or
nearly ten-percent reduction to the Administration's request for EPA's
basic environmental and public health programs, which are the backbone of
the Agency's work. Unless reversed, a cut of this magnitude would
seriously affect EPA's ability to provide American communities with cleaner
water, cleaner air, and an improved quality of life. Major cuts are
targeted at:

Environmental Enforcement. The Committee's reduction would
deprive EPA of critically needed funding and undermining enforcement
of environmental laws by capping specific expenditures for criminal
and civil enforcement and compliance inspections. As a result,
serious pollution problems caused by noncompliance would go
unaddressed;

Climate Change Technology Initiative (CCTI). A cut of this
magnitude would damage EPA's common sense voluntary programs designed
to mitigate global climate change, improve the Nation's energy
efficiency, reduce U.S. dependence on foreign oil, and save consumers
money. The Committee bill also has made reductions that would set
back efforts to develop fuel efficient automobiles, sport utility
vehicles, and trucks;

Information Integration Initiative. The Committee bill would
eliminate funding for a major effort to integrate environmental data
bases, which is designed to give EPA and the States the tools to use
environmental data more efficiently and cost-effectively in cleaning
up the environment.

While the Administration appreciates the increases provided for the Clean
Water Action Plan, we strongly urge restoration of funding for the Great
Lakes Initiative. This funding is critically needed to address
contaminated "areas of concern" in the Great Lakes. The Administration
likewise urges restoration of funding for section 319 non-point source
pollution control grants, to provide needed assistance in combating
polluted runoff -- the largest remaining source of water pollution today --
and for State grant funding for the specific purpose of protecting water
quality through Total Maximum Daily Load (TMDL) allocations. In addition,
the Administration urges that all of the increased State grant funding in
the bill be accompanied by increases in State matching funds, a requirement
that the current Committee language does not ensure.

The Administration opposes the $67 million reduction to the request for
Superfund funding available to the EPA, which under this Administration has
operated at a record pace to clean up hazardous waste sites. This
reduction would needlessly jeopardize the public health for citizens living
near affected sites by eliminating virtually all new cleanup starts and
making it difficult to meet the President's 900-site construction
completion goal by FY 2002. Further, the Administration objects to the
Committee's proposal to finance half of the appropriation from general
revenue. Such financing is contrary to the "polluter pays" principle and
would be unfair to the general public, who would be forced to pay for the
irresponsible actions of polluters.

The Administration also objects to the elimination of funding for the Clean
Air Partnership Fund. This Fund would provide grants to State and local
governments for innovative projects that reduce multiple air pollutants,
such as toxics, soot, and smog, as well as reducing greenhouse gases. This
Fund would support a wide range of projects that would mean cleaner air and
savings for consumers.

The Administration strongly objects to several anti-environmental riders:

Total Maximum Daily Load (TMDL) Water Pollution Rule. The
Administration strongly objects to language blocking implementation of a
pending revision to EPA's TMDL water pollution rule, which is intended to
provide an effective, common-sense framework for cleaning up remaining
polluted waters. This legislative rider would significantly slow efforts
to clean up the almost 20,000 bodies of water nationwide that States have
identified as still too polluted for fishing and swimming. Stronger TMDL
regulations are critical to delivering on the promise of the original Clean
Water Act.

Kyoto Protocol. The Administration opposes Committee bill and
report language relating to the Kyoto Protocol. This language is
unnecessary as the Administration has no intent of implementing the
Protocol prior to congressional ratification. To the extent that this
provision could be read to prevent EPA from assisting the President in
carrying out his Constitutional authority to conduct international
negotiations, it would be disruptive to those efforts and may well be
unconstitutional.

Pesticide Tolerance Fees. The Administration strongly opposes
Committee bill language preventing implementation of a statutorily
required rule to charge pesticide tolerance fees. This language would
cripple efforts to protect the public from dangerous pesticides by
preventing collection of user fees intended to fund a major portion of
the tolerance reassessment program in FY 2001. Further, the language
would let pesticide manufacturers, who currently pay only one-tenth of
the cost of issuing pesticide tolerances, off the hook for paying to
protect the public from their products. It is also contrary to last
year's conference report, which indicated that this rule would not be
blocked in FY 2001.

Title VI Interim Guidance. The Administration is concerned that
the Committee bill has retained the language regarding EPA's Title VI
interim guidance. As a matter of principle, the language is a problem
because it restricts our ability to effectively process and resolve
complaints. The Administration continues to object to this language
and notes that revised draft guidance is expected to be available
shortly for public review and comment.

Protective Standards for Radon In Drinking Water. The Committee
should delete Committee report language intended to prevent EPA from
fulfilling its obligations under the bipartisan Safe Drinking Water
Act Amendments of 1996 to develop protective standards for radon in
drinking water, which the National Academy of Sciences has confirmed
poses a cancer risk. The Committee language attempts to thwart EPA's
efforts to protect public health, while providing the States with
statutorily authorized flexibility to use a multi-media approach in
limiting the public's exposure to radon.

Contaminated Sediments. In addition, the Committee should
delete Committee report language intended to restrict EPA's ability to
cleanup contaminated sediment sites that pose a threat to public
health and the environment. The report language is broader in scope
and more restrictive than previous report language. The
Administration is very concerned that this language could stop or
delay the cleanup of Superfund sites and other contaminated sediment
sites across the country.

Council on Environmental Quality

The Administration appreciates the additional $95,000 for FY 2001 provided
in the Committee bill, but believes full funding of the requested increase
of $204,000 is needed for the Council on Environmental Quality (CEQ) to
fulfill its statutory responsibilities. The Administration opposes the
limit included in Committee report language of 22 FTEs for CEQ, instead of
the 26 estimated FTEs that were requested. This limitation would hamper
CEQ's ability to provide for the optimal level of staff to run the agency
efficiently.

Federal Emergency Management Agency

The Administration appreciates the efforts of the Committee to provide
funds needed for the operation of the Federal Emergency Management Agency
(FEMA). However, the Administration strongly urges the Committee to
provide the $300 million requested in regular appropriations for disaster
relief, as well as the full $2.6 billion in contingent emergency funding
requested. These funds are needed to ensure FEMA's ability to respond
quickly and fully to disasters in FY 2001.

With 600,000 Americans homeless, the Administration strongly urges the
Committee to provide the full request of $140 million for the Emergency
Food and Shelter Program. Failure to provide the full request would lead
to 25 million fewer meals served and more than one million nights of
temporary lodging that would not be provided. The Administration
appreciates the Committee's support for FEMA's mitigation programs.
However, rather than providing the full request for pre-disaster mitigation
(Project Impact) and repetitive loss buyouts, the Committee has elected to
pursue an "either-or" strategy that will lead to reductions in pre-disaster
mitigation, or fewer buyouts of repetitively flooded homes, or both. This
strategy would only lead to increased long-term disaster costs. In
addition, the Administration urges the Committee to fund the $23.6 million
requested for FEMA's headquarters building requirements.

Community Development Financial Institutions Fund

The Administration is concerned with the House Committee's decision to fund
the Community Development Financial Institutions (CDFI) Fund at $105
million, $20 million below the request. This reduction would result in
approximately 30 fewer organizations receiving awards than assumed in the
request. We urge the Committee to fully fund CDFI at the President's
request of $125 million. The requested level will enable CDFI to meet the
increasing demand by financial institutions to leverage investments, make
loans, and provide technical assistance and other financial services in
some of the country's most distressed communities.

Department of Veterans Affairs

Tobacco Litigation. The Administration strongly objects to this
special interest provision that is intended to prohibit VA from
transferring funds to the Department of Justice to support litigation
against tobacco companies. VA spends more than $1 billion annually
treating veterans suffering from tobacco-related conditions and is
committed to helping the Federal Government recover these funds. As one of
the three major client agencies in this litigation, VA would receive a
share of any recoveries and would directly apply them to medical services
for our Nation's veterans.

Medical Care -- Operation and Maintenance of Facilities. The
Administration has serious concerns about the $3 billion limit on
Medical Care funds that may be used for the operation and maintenance
of facilities. There is no clear definition of the terms "operation
and maintenance," so it is impossible to know the repercussions of
such a limit. The Administration will work with the Congress to
develop appropriate definitions and cost methodologies.

Medical Care -- Collections. The Committee has funded the
President's Medical Care request, which includes full funding for new
Millennium Bill benefits. However, the Committee has rejected the
medical care collections proposal. As a result, total medical care
funding comes at the expense of other critical VA programs.

Medical Care -- Hepatitis C. The Administration understands the
importance of encouraging VA medical centers to reach out to more
veterans with Hepatitis C. However, the Administration is concerned

that integrating Hepatitis C patients in the current Complex Care

category may significantly alter and disrupt the proper allocation of
veteran medical resources across the Nation. Therefore, VA is
creating a separate Complex Care allocation factor for Hepatitis C
under Veterans Equitable Resource Allocation (VERA), and will
calculate Veterans Integrated Service Network (VISN) resources using
this new methodology.

Construction. The Administration opposes the $62 million
reduction in Minor Construction funding, which would adversely affect
all VA operations, ranging from patient safety and maintenance in VA
medical centers to gravesite development in some national cemeteries.

Veterans Benefits Administration. The Committee bill reduces
the President's request by $28 million, which represents a cut of
almost three percent. Because the Committee would require VA to
continue aggressively hiring new claims examiners, this cut would need
to be taken in critical information technology initiatives, severely
inhibiting the ability to modernize claims adjudication and expedite
and improve processes.

Vocational Rehabilitation and Employment. The Administration is
concerned by the Committee's rejection of our proposed one-time $30
million adjustment from the Readjustment Benefits account to the
General Operating Expenses account to fund administrative services
correctly.

Consumer Product Safety Commission

The Administration is concerned with the Committee's $1.5 million reduction
to the President's request of $52.5 million for the Consumer Product Safety
Commission. This reduction could impede the Commission's efforts to
protect children and families against unreasonable risks of injury and
death from consumer products.

Critical Infrastructure Protection/Cyber Crime

The Administration urges the Committee to fully fund the President's
request for critical infrastructure protection/cyber crime for the National
Science Foundation and Federal Emergency Management Agency (FEMA). These
funds are a crucial component of the national, interagency effort to
protect infrastructure -- particularly information systems -- in both
Government and the private sector that is essential to the functioning of
our economy, national defense, and the safety of the population.
Specifically, the Administration urges the Committee to fund the
President's request of $43 million, including $11.2 million for
Scholarships for Service, for the National Science Foundation's critical
infrastructure protection activities. The Scholarships for Service effort
is intended to develop the next generation of Federal information
technology managers by awarding scholarships for the study of information
assurance and computer security in exchange for Federal service.
Additionally, we urge the Committee to provide the President's request of
$673,000 for FEMA to assess current internal vulnerabilities and several
cyber protection issues.